Question 1

Stated value stock is no-par stock that is assigned a "stated" value per share by the corporation's board of directors.

Accepted Answer

A) True 
 B)False

Question 2

Stockholders' equity consists of which of the following?

Accepted Answer

A) Long-term assets. 
B) Paid-in capital and retained earnings. 
C) Premiums and discounts. 
D) Paid-in capital and par value. 
E) Retained earnings and cash. 
A) Long-term assets. 
B) Paid-in capital and retained earnings. 
C) Premiums and discounts. 
D) Paid-in capital and par value. 
E) Retained earnings and cash.

Question 3

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

Accepted Answer

A) A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000. 
B) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000. 
C) A debit to Cash for $14,000. 
D) A credit to Common Stock for $14,000. 
E) A credit to Common Stock for $182,000. 
A) A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000. 
B) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000. 
C) A debit to Cash for $14,000. 
D) A credit to Common Stock for $14,000. 
E) A credit to Common Stock for $182,000.

Question 4

Boron Company is authorized to issue 50,000 shares of $50 par value, 8%, cumulative, fully participating preferred stock, and 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:
 $\begin{array} { l  l}
 \text {May 5}& \text { Exchanged 2,200 shares of preferred stock for a building with a market} \
& \text {value of $ \$ 135,000 $. } \
 \text { July 20}& \text {Sold 1,550 shares of preferred stock for $ \$ 50 $ cash per share. } \
 \text {Dec. 20 }& \text { Sold 1,000 shares of preferred stock at $ \$ 52 $ cash per share.} \
\end{array}$

Accepted Answer

The answer of Boron Company is authorized to issue 50,000...

Question 5

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

Accepted Answer

A) True 
 B)False

Question 6

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

Accepted Answer

A) Minimum legal capital. 
B) Par value of preferred. 
C) Stated value. 
D) Premium capital. 
E) Working capital. 
A) Minimum legal capital. 
B) Par value of preferred. 
C) Stated value. 
D) Premium capital. 
E) Working capital.

Question 7

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

Accepted Answer

A) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000. 
B) A credit to Common Stock for $84,000. 
C) A debit to Common Stock for $12,000. 
D) A debit to Land for $12,000. 
E) A credit to Land for $12,000. 
A) A credit to Paid-in Capital in Excess of Par Value, Common Stock for $72,000. 
B) A credit to Common Stock for $84,000. 
C) A debit to Common Stock for $12,000. 
D) A debit to Land for $12,000. 
E) A credit to Land for $12,000.

Question 8

The journal entry to record the declaration of dividends on common stock includes a debit to Retained Earnings and a credit to Common Dividend Payable.

Accepted Answer

A) True 
 B)False

Question 9

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

Accepted Answer

A) $600. 
B) $7,000. 
C) $100. 
D) $6,000. 
E) $1,000. 
A) $600. 
B) $7,000. 
C) $100. 
D) $6,000. 
E) $1,000.

Question 10

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Accepted Answer

A) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
B) Debit Dividend Expense $12,000; credit Cash $12,000. 
C) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
D) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
E) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000. 
A) Debit Common Dividend Payable $12,000; credit Retained Earnings $12,000. 
B) Debit Dividend Expense $12,000; credit Cash $12,000. 
C) Debit Retained Earnings $12,000; credit Common Dividend Payable $12,000. 
D) Debit Common Dividend Payable $12,000; credit Cash $12,000. 
E) Debit Dividend Expense $12,000; credit Common Dividend Payable $12,000.

Question 11

Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

Accepted Answer

A) Premium on stock. 
B) Capital gain. 
C) Discount on stock. 
D) Preemptive right. 
E) Financial leverage. 
A) Premium on stock. 
B) Capital gain. 
C) Discount on stock. 
D) Preemptive right. 
E) Financial leverage.

Question 12

Par value of a stock refers to the:

Accepted Answer

A) Market value of the stock on the date of the financial statements. 
B) Issue price of the stock. 
C) Dividend value of the stock. 
D) Maximum selling price of the stock. 
E) Value assigned per share by the corporate charter. 
A) Market value of the stock on the date of the financial statements. 
B) Issue price of the stock. 
C) Dividend value of the stock. 
D) Maximum selling price of the stock. 
E) Value assigned per share by the corporate charter.

Question 13

Stock that was reacquired and is still held by the issuing corporation is called:

Accepted Answer

A) Capital stock. 
B) Treasury stock. 
C) Preferred stock. 
D) Redeemed stock. 
E) Callable stock. 
A) Capital stock. 
B) Treasury stock. 
C) Preferred stock. 
D) Redeemed stock. 
E) Callable stock.

Question 14

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

Accepted Answer

A) $44.00. 
B) $26.67. 
C) $1.71. 
D) $1.59. 
E) $1.65. 
A) $44.00. 
B) $26.67. 
C) $1.71. 
D) $1.59. 
E) $1.65.

Question 15

Common Stock Dividend Distributable is a liability account.

Accepted Answer

A) True 
 B)False

Question 16

Sweet Company's outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. $$\begin{array}{l}

\begin{array} { l r r } &\text { Dividend Declared }\
\text { year 1 } & \$ 2,000 \
\text { year 2 } & \$ 6,000 \
\text { year 3 } & \$ 32,000 \
\end{array}
\end{array}$$ The total amount of dividends paid to preferred and common shareholders over the three-year period is:

Accepted Answer

A) $10,000 preferred; $30,000 common. 
B) $12,000 preferred; $28,000 common. 
C) $5,000 preferred; $35,000 common. 
D) $15,000 preferred; $25,000 common. 
E) $11,000 preferred; $29,000 common. 
A) $10,000 preferred; $30,000 common. 
B) $12,000 preferred; $28,000 common. 
C) $5,000 preferred; $35,000 common. 
D) $15,000 preferred; $25,000 common. 
E) $11,000 preferred; $29,000 common.

Question 17

Common stock always carries a preference for receiving dividends over preferred stock.

Accepted Answer

A) True 
 B)False

Question 18

Djarleen Company has 10,000 shares of $10 par preferred stock, which were issued at par. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

Accepted Answer

A) $10.00. 
B) $40.00. 
C) $15.60. 
D) $16.67. 
E) $16.00. 
A) $10.00. 
B) $40.00. 
C) $15.60. 
D) $16.67. 
E) $16.00.

Question 19

Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

Accepted Answer

A) $0 preferred; $30,000 common. 
B) $30,000 preferred; $0 common. 
C) $12,000 preferred; $18,000 common. 
D) $15,000 preferred; $15,000 common. 
E) $6,000 preferred; $24,000 common. 
A) $0 preferred; $30,000 common. 
B) $30,000 preferred; $0 common. 
C) $12,000 preferred; $18,000 common. 
D) $15,000 preferred; $15,000 common. 
E) $6,000 preferred; $24,000 common.

Question 20

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

Accepted Answer

A) Right to call. 
B) Proxy right. 
C) Voting right. 
D) Preemptive right. 
E) Financial leverage. 
A) Right to call. 
B) Proxy right. 
C) Voting right. 
D) Preemptive right. 
E) Financial leverage.

Stated value stock is no-par stock that is assigned a "stated" value per share by the corporation's board of directors.

Stockholders' equity consists of which of the following?

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

The journal entry to record the declaration of dividends on common stock includes a debit to Retained Earnings and a credit to Common Dividend Payable.

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

Par value of a stock refers to the:

Stock that was reacquired and is still held by the issuing corporation is called:

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

Common Stock Dividend Distributable is a liability account.

Common stock always carries a preference for receiving dividends over preferred stock.

Djarleen Company has 10,000 shares of $10 par preferred stock, which were issued at par. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 13: Accounting for Corporations

Stated value stock is no-par stock that is assigned a "stated" value per share by the corporation's board of directors.

Stockholders' equity consists of which of the following?

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

In many states, the minimum amount that stockholders must contribute to the corporation, and which is intended to protect the creditors of the corporation, is called the:

A corporation issued 6,000 shares of its $2 par value common stock in exchange for land that has a market value of $84,000. The entry to record this transaction would include:

The journal entry to record the declaration of dividends on common stock includes a debit to Retained Earnings and a credit to Common Dividend Payable.

A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital in excess of par is:

A company's board of directors votes to declare a cash dividend of $1.00 per share on its 12,000 common shares outstanding. The journal entry to record the payment of the cash dividend is:

Achieving an increased return on common stock by paying dividends on preferred stock at a rate that is less than the rate of return earned with the assets invested from the preferred stock issuance is called:

Par value of a stock refers to the:

Stock that was reacquired and is still held by the issuing corporation is called:

Mayan Company had net income of $132,000. The weighted-average common shares outstanding were 80,000. The company has no preferred stock. The company sold 3,000 shares before the end of the year. There were no other stock transactions. The company's earnings per share is:

Common Stock Dividend Distributable is a liability account.

Common stock always carries a preference for receiving dividends over preferred stock.

Djarleen Company has 10,000 shares of $10 par preferred stock, which were issued at par. It also has 250,000 shares of common stock outstanding, and its total stockholders' equity equals $4,000,000. The book value per common share is:

Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

The right of common shareholders to purchase their proportional share of any common stock later issued by the corporation is called a:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resoures, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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